Oil cooler as Opec promises to keep output at maximum

Oil prices fell sharply yesterday from the record highs hit on Friday after the Opec producers' cartel promised to keep output near maximum capacity.

Prices were at $73.82 per barrel in late London trading yesterday, following Friday's break through the $75 barrier in New York when prices set a new peak for the fourth day running. Despite the drop in prices, the cartel said it was powerless to cool the market, even if it raised its output ceiling to 28m barrels per day.

Ali Al-Naimi, the Saudi oil minister, said: "You know and I know that the reason the price is where it is is not from a shortage of supply."

Global tensions surrounding the state of the US's oil supply and investment fund buying in the commodity sector has fuelled prices.

Ministers from the cartel said tensions in Iran and Nigeria had added as much as $15 per barrel. But Kazem Vaziri, Iran's oil minister, tried to calm fears in the market. "We strongly believe there is no reason for sanctions but in any case we will not cut our oil exports," he said in Doha.

Opec is the the source of more than a third of the world's oil, yet analysts agreed that the organisation had little scope for managing the oil market.